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Those who have worked in the business as long as I have will easily remember the rare earth mania of 2008–11. For about three years following China's export restrictions on rare earth elements, which hiked the prices of REEs to record highs, the junior resource market was awash with new rare earth explorers.
These tiny companies fanned out across (mostly) Canada, the U.S. and Australia in search of the next rare earths motherlode that would break the world's dependence on China, which then and now has a monopoly—the country either mines or processes something like 95% of the 17 rare earth elements (REEs) and turns them into oxides, then continues the process of making high-purity metals, alloys and powders that are used in everything from cell phones, flat-screen TVs, permanent magnets and lasers, to wind turbines, nuclear reactors and missile guidance systems. While the spike in rare earths prices was good for Molycorp and all the exploration companies that sprang up in search of them, buyers of products made from rare earths balked and pressured governments to do something about it. The U.S., European Union and Japan brought a case to the World Trade Organization to try and settle the dispute and get China to lift the restrictions.
In 2015 it did, resulting in a torrent of Chinese rare earth exports into the market and the inevitable collapse in prices. The move caught Molycorp off-guard. The company had just spent over a billion dollars on another upgrade at Mountain Pass but within months, Molycorp fell deeply in debt and went bankrupt.
Most of the rare earth juniors withered and died too. For a more detailed history read our How the US lost the plot on rare earths.
Separation anxiety
Mining rare earth elements is fairly straightforward: if found close enough to surface they can be scooped up in open pits, crushed and gravity-separated from the host minerals, but separating and extracting a single REE takes a great deal of time, effort and expertise.
The ore is ground using crushers and rotating grinding mills, magnetic separation (bastnasite and monazite are highly magnetic, they can be separated from non-magnetic impurities in the ore through repeated electromagnetic separation) and flotation gives you the lowest value sellable product in the rare earth supply chain—the concentrated ore. The milling equipment, including crushers; grinding mills; flotation devices; and magnetic, gravity, and electrostatic separators, all have to be configured in a way that suits the type of ore being mined—no two ores respond the same way.
The major value in REE processing lies in the production of high-purity rare earth oxides (REOs) and metals—but it isn't easy. A REE refinery uses ion exchange and/or multi-stage solvent extraction technology to separate and purify the REEs. Solvent-extraction processes involve re-immersing processed ore into different chemical solutions in order to separate individual elements. The elements are so close to each other in terms of atomic weight that each of these processes involves multiple stages to complete the separation process. In some cases it requires several hundred tanks of different solutions to separate one rare earth element. Heavy rare earth elements are the hardest, most time-consuming to separate.
The composition of REOs can also vary greatly; they can and often are designed to meet the specifications laid out by the end-product users. An REO that suits one manufacturer's needs may not suit another's.
For more on mining and processing REEs, read our Mine to Magnet.
Doing it wrong
The challenges of producing anything more then a rare earth concentrate has always been several fold for junior resource companies—complicated mineralogy means complicated expensive metallurgy, a lack of infrastructure and a lack of technical knowledge of the extraction process.
The disbursement of the REEs in a typical deposit is not uniform and they are often contained in different ores—as high as 5. The more complicated the minerology the more complicated, expensive and time consuming metallurgy will be. A lack of infrastructure doubles down on your problems. This includes easily accessible power, water, NG, roads and railways. Many rare earth properties are far from any infrastructure, minimizing the prospect of advancement.
They mostly failed. Not one of those highly touted junior held rare earth deposits outside China has been turned into a mine. The hype dissipated and resource investors moved on to other metals.
Arguably though, the importance of rare earth elements has never gone away; in fact they are more crucial than ever, as trade tensions between the U.S. and China and the markets for REEs grow—such as for neodymium, praseodymium and dysprosium used in permanent magnets placed in electric vehicles.
For more read our Rare earths in cross-hairs of new arms race.
This article will look back at the rare earth mania, describe why none of these companies have made it past the feasibility stage, and present a roadmap for how to build a rare earths mine, one step at a time, that is both feasible and cost-effective.
Rare earth mania
Today, the only significant non-Chinese firms currently producing rare earth elements are Molycorp, whose Mountain Pass mine in California mines the REEs and ships them to China for processing, and Lynas, whose Mt. Weld mine in Western Australia produces a concentrate that is processed in Malaysia. A few other countries produce a handful, tonnage-wise, of REEs but they are very small compared to China—just 1,600 to 3,000 tonnes annually compared to China's 105,000 tonnes.
For a time though, rare earths were on the lips of every mining investment house and resource junior. To not have a rare earths play meant missing out on the party. The chart below courtesy of Avista Group shows the bubble inflating then the pop. For instance, dysprosium prices rocketed from $118 a kilogram in 2008 to an insane $2,262/kg in 2011. Europium ran up from around $600/kg in 2010 to $3,000/kg the following year.